Archive for the 'For Buyers' Category
Mortgage Interest Rates Help Boost Affordability Of Chicago Condos, Single-Family Homes
May 18th, 2012 categories: Economic Recovery, For Buyers, For Homeowners
Why is now a great time to buy a house? Housing prices are affordable in Chicago, even in the city’s top neighborhoods, places like Lincoln Square, Lakeview and Lincoln Park. Sellers are willing to negotiate. And there are plenty of homes from which to choose across the country.
But just as important, mortgage interest rates recently fell to yet another historic low point.
Bloomberg recently reported on this new milestone. According to the story, the average rate for a 30-year fixed-rate mortgage loan fell to 3.83 percent during the week ended May 10. This is the lowest this figure has been since Freddie Mac began tracking the number in 1971.
Borrowers hoping for a 15-year fixed-rate mortgage received good news, too. The average interest rate on a 15-year fixed-rate mortgage loan fell to 3.05 percent last week. That’s down from 3.07 percent the week earlier.
This means that it’s cheaper to finance a home. If you took out a $200,000 30-year fixed-rate mortgage loan with an interest rate of 6 percent, you’d face a monthly mortgage payment of $1,199.10.
But if you dropped that interest rate to 3.83 percent for the same loan, you’d have a monthly mortgage payment of just $935.33.
That’s a difference of $263.77 a month, or a little more than $3,165 a year.
So if you’re thinking about buying a home, now might be the time to act. It’s impossible to predict what mortgage interest rates will do in the coming weeks. But the rates today are outstanding ones, historically so.
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Case-Shiller Numbers Paint Picture Of A Still-Struggling Chicago Housing Market
April 30th, 2012 categories: Economic Recovery, For Buyers, For Homeowners, For Sellers, Housing Market
The most recent numbers from the Standard & Poor’s/Case-Shiller housing index paint a grim picture of the Chicago-area housing market. According to a story by Crain’s Chicago Business, the numbers show that housing prices in the Chicago area have fallen to a 12-year low.
That’s right: Housing values in the city in February fell to where they last stood in May of 2000, according to the Case-Shiller numbers.
The Case-Shiller report found that Chicago-area single-family home prices fell 2.5 percent in February when compared to January. Prices were down a high 6.9 percent this February compared to the same month one year earlier.
This news is especially grim if you purchased your Chicago-area single-family home or condominium in late 2006. According to Case-Shiller, Chicago-area housing prices have fallen 37.5 percent from where they stood in September of 2006, the peak of housing values in the city and suburbs.
The Crain’s story quotes Tom Feltner, vice president at Chicago’s Woodstock Institute, who says that this probably isn’t the bottom for the Chicago housing market, either. According to Feltner, we should expect to see prices for Chicago-area condos and single-family homes to continue to fall as an influx of foreclosure homes hits the market.
If you have to sell today, and you originally bought your residence in 2004, 2005 or 2006, the reality is that you’ll probably take a loss in the sale. Remember, buyers today don’t care what you paid for your residence six years ago. They only care about what your property’s market value is today.
If you absolutely must sell, then, it’s important to work with a skilled REALTOR® who knows your community. This agent can help you set the right price for your property, one that will generate the highest number of quality offers. It’s important, too, to listen to the advice of your REALTOR® when it comes to listing price. You can be stubborn and demand to list your residence for a higher price. The odds are good, though, that buyers will simply ignore your property and move on to those residences that are priced properly according to today’s market.
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Renting May Not Be Cheaper Than Buying
April 11th, 2012 categories: Chicago Info/News, For Buyers, For Sellers, Housing Market, Renting in Chicago
Think renting an apartment will save you money when compared to buying a house? Don’t be so sure.
According to a story by the Reuters news agency, average monthly apartment rents across the country saw their biggest increase in four years.
This sheds new light on the age-old rent vs. buy question.
Some have said that it makes more financial sense to rent as housing values continue to fall across the country. But does that still hold if apartment rents continue to rise? As rents climb, it no longer seems quite as affordable to rent.
According to the Reuters story, asking rents across the country have risen to $1,070 a month on average. That’s an increase of 0.5percent from the last quarter of 2011. Effective rents, which take away perks offered by landlords such as free months of rent, jumped 0.9 percent during the first quarter of this year to $1,018 a month. That’s the largest increase in effective rents since the first quarter of 2008.
There’s a simple reason why rents are rising so quickly: supply and demand.
The Reuters story reported that apartment vacancy rates in the first quarter of this year fell to their lowest levels in more than a decade, to a stunningly low 4.9 percent. As demand for apartment living increases – thanks in part to housing foreclosures – the supply of available units has been shrinking. That allows landlords to increase the amount of rent they charge each month.
Will this formula change any time soon? It doesn’t look like it. Foreclosures continue to rise, and people who’ve lost their homes need to live somewhere. Many of them are entering the rental market, further reducing the amount of available rental units.
So if you’ve long thought that renting was a cheaper option than is taking on a mortgage loan, the latest numbers suggest that you may have to change that line of thinking.
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Trulia Study Offers More Proof: This Is A Great Time To Buy A Home In Chicago
April 5th, 2012 categories: Chicago Info/News, Chicago Neighborhoods, Economic Recovery, For Buyers, Housing Market
Looking for a reason why it makes sense to buy a home today? Trulia, an online real estate portal, has a big one for you: The odds are that where you live it’s cheaper to own a home today than it is to rent.
And that includes residents of Chicago and its suburbs.
Trulia recently released its new rent-vs.-buy study, and the results were intriguing: In 98 out of 100 major markets across the country — including Chicago — it was cheaper for consumers to own a home than it was for them to rent.
The reasons for this? Rents are increasing across the country. They’re certainly rising quickly in Chicago and its suburbs. And at the same time, housing prices continue to fall, in Chicago and across the country.
Then there are the low mortgage interest rates, still around the 4 percent mark for 30-year fixed-rate mortgage loans. This makes it less expensive for buyers to borrow money to finance the purchase of a home.
This all combines to make owning a home more affordable than renting.
I’ve long said that this is a great time to buy a home. Look at our Chicago market. According to data from the Illinois Association of REALTORS(R), median home prices here were down 6.6 percent in February from the same month one year earlier. That translates to a median price of $141,000 this February compared with a median price of $150,000 last year at this time.
And this trend shows no signs of slowing. Housing foreclosures continue to glut the Chicago market. Foreclosures tend to drag down the median sales prices of homes throughout an entire area.
The Trulia study, then, provides yet more evidence that there’s rarely been a better time to buy a home, whether you’re looking for a condominium or single-family home in the Chicago area or across the country.
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Even With Fee Increase, FHA Loans Still Right Choice For Chicago Buyers
March 19th, 2012 categories: For Buyers, Mortgage Info, Refinancing
Mortgage loans backed by the U.S. Department of Housing and Urban Development’s Federal Housing Administration, better known as FHA loans, will soon become more expensive for homebuyers.
According to financial Web site Bankrate.com (RYAN: http://www.bankrate.com/financing/mortgages/fha-fees-on-the-rise-again/), starting April 1 borrowers will pay more for upfront mortgage insurance provided by the FHA. This follows a rate increase that came in April of last year. As Bankrate reports, FHA loan fees are now at their highest point in the government agency’s history.
Premiums for FHA insurance will rise from 1 percent to 1.75 percent of the base mortgage loan that borrowers are taking out. The FHA says that the increase will add about $5 a month to the mortgage fees that borrowers pay.
That average $5 increase might not seem like a lot. But buying a home is not an easy financial task for many purchasers today. They won’t appreciate any fee increase.
That being said, FHA-backed loans are still terrific options for today’s home buyers. Of course, the FHA does not originate loans. Instead, the government administration insures them. This doesn’t change the fact, though, that FHA loans offer several benefits to homebuyers.
The most important? For most borrowers, FHA-insured loans require down payments of just 3.5% of a home’s final purchase price. This is a key benefit. Conventional mortgage loans often require buyers to put up at least 10 percent of a home’s purchase price as a down payment.
Consider a single-family home or condominium in the Chicago area that costs $200,000. A 10% down payment would require buyers to come up with $20,000. If these same buyers had good enough credit to qualify for a 3.5% down payment with an FHA loan, they’d only have to come up with $7,000. That’s a big difference.
FHA-backed loans are also available to homebuyers with lower credit scores. Borrowers with FICO credit scores of at least 580 will qualify for the 3.5% down payment requirement. Those with credit scores of 500 to 579 will be able to take out an FHA loan with a down payment requirement of 10 percent.
Those borrowers with credit scores under 500 will not qualify for FHA financing.
Even with the fee increase, then, an FHA loan is still a good chance for many Chicago homebuyers.
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